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The Sweetwater school district owes as much as $380,000 to the state for free and reduced-cost meals wrongly billed to a government program — a debt that will be shared by student governments involved in marketing the lunches for the district.

A state review of the Sweetwater Union High School District found nearly 160,000 meals billed this school year for students who did not meet low-income requirements. The state wants the money back, although the district is appealing that decision.

When The Watchdog reported the problem last month, food-service director Nancy Stewart said the money would have to come out of the district’s operating budget.

Since that time, The Watchdog has learned that the district is withholding payments owed to Associated Student Body programs that were involved in promoting the meals program.

“The feds have been paying the district for excessive meals,” Chief Financial Officer Dianne Russo wrote to 25 student-government advisers on April 25. “As a result, we are getting hit with a $380,000 pay back.

“Unfortunately, this means less dollars to share with the ASBs. As I don’t know the extent of it at this point, we will not be able to pay the 3rd and 4th quarters until we finalize where the numbers will fall out. I know this is bad news, but if the Food Service Fund does not have the money, they cannot pay you.”

In many cases, the missing payments amount to tens of thousands of dollars. They usually represent the biggest source of income for student groups.

Sweetwater officials defended the withholding as a prudent step aimed at making sure the student groups are not paid money now that they will later have to pay back.

District spokeswoman Graciela Sevilla said the issue did not interfere with more traditional student government functions.

“As far as I’m aware, they did all of the activities that they intended to do,” she said.

The money being withheld from ASBs is part of a contract with the district. Participating ASBs agreed to promote school meals. Sweetwater collects $2.70 from the state for each free lunch and $2.32 for each reduced-cost lunch it serves.

To encourage the ASBs to market the program, the district agreed to give the student groups 70 cents for each meal sold.

The April 25 email scaled the commission back.

“With the reduction for meals because students cannot be counted until their application is approved, we will have to go back to $.45 per meal,” Russo told the ASB advisers.

The Watchdog contacted California Department of Education officials for an update on the meal money owed by Sweetwater, and informed state officials of the plan to use the ASB share of money.

State officials said the set-up of the marketing agreement, where some of the program funds go into ASB accounts, may not be allowed by law.

“Any funds from the Child Nutrition Program cannot be used for any purpose other than the operation or the improvement of the Child Nutrition Programs,” said Suzanna Nye, chief monitor for the state child-nutrition program. “Federal law does not allow profit-sharing.”

Sweetwater officials said the partnerships were well-known across the community and the state. They noted that state reviewers praised the program in their recent report.

“That was very public,” Sevilla said. “It wasn’t anything that was done clandestinely or under the table.”

Most districts required to repay meal subsidies elect to have the debt withheld from future revenues instead of paying it off in one lump sum, state officials said. That way, local administrators can absorb the expense over time.

A staple in American public education, Associated Student Body groups are designed to raise money to provide students with a variety of services throughout the school year.

They typically raise money through ticket sales and concessions at dances and sporting events, then spend the proceeds on extracurricular activities like art, music or travel expenses.

The groups generally are governed by elected student leaders and advised by teachers or administrators.

The agreements between the district and the student groups calls for the campuses “to promote participation in the free & reduced lunch program” in order to boost revenue.

More than $10 million of the district’s $13 million food-services revenue comes from the meal subsidies.

The Watchdog attempted to contact each of the 25 advisers listed on the Russo email and reached more than half. None agreed to speak on the record.